Warehouse Automation Isn’t for Me. Or Is It? Debunking Myths About Automation Technology
Published on 4 May 2023
Warehouse automation is all the rage these days. Spurred by recent supply chain disruptions, labor shortages, and more affordable technology solutions, DC operators have been making the jump to automated processes. To hear experts speak of it, every company out there that’s operating a warehouse or a distribution center (DC) has already automated its operations or on its way to doing so.
But, as the saying goes, appearances can be deceiving.
While we’re undeniably seeing more and more companies acquire and implement the equipment and technology solutions to automate their processes, it remains that most warehouse and DC operators have yet to make the jump. The truth of the matter is that more or less 80% of warehouses around the world are still completely devoid of automation technology.
So, if warehouse automation is indeed the future of supply chains, why is it that so many operators have been hesitant to invest in the technology solutions and MHE they need to remain competitive in tomorrow’s market?
Let’s debunk some of the misperceptions and myths about automation that are preventing stakeholders from making informed decisions when it comes to their supply chain infrastructure.
Automation technology is only for larger, more complex operations.
The perception often is that warehouse automation is “overkill” for small and medium businesses (SMBs). With a lower number of SKUs and “pen & paper” supported processes, stakeholders at SMBs don’t see much sense in investing in automation solutions that only threaten to complicate warehousing processes that work “just fine” in the name of marginal operational gains.
The truth is, however, that there is no “size” requirement for automation technology. In a world dominated by the likes of Amazon and Walmart, quicker and more accurate order fulfillment is no longer a luxury that only the “big guys” can afford—it has become a requirement for any and all companies that want to thrive in a highly competitive market.
Labor shortages also make no discrimination between large and small warehouses. In a context where companies struggle to find and retain qualified employees, it pays to lower one’s dependence on a large workforce. Automating repetitive tasks is a great way to achieve just that—and to improve your employees’ working environment.
OK, I see how it might help my operation, but the cost of automation technology is still well beyond my company’s means.
Automated MHE and technology solutions are a major investment. There’s no denying that. That’s of course all the more true for SMBs and family-owned enterprises, which typically have more limited access to capital. As a result, stakeholders will often come to the conclusion that the expected ROI doesn’t justify the initial expenditure.
The error here comes from thinking that the solution should pay for itself rapidly to be worth the investment. However, technology solutions and automated MHE are infrastructure decisions. As such, ROI should be calculated on the “long term”—think of a 5 to 7 years horizon. Keep in mind, also, that infrastructure investments improve a company’s bottom line in more ways than one.
A Warehouse Management System (WMS), for example, which automatizes warehousing processes, delivers more than a higher throughput. It drastically improves inventory, order fulfillment, and shipping accuracy, which leads to better budget control and higher level of customer satisfaction. A WMS also reduces labor dependence and improves employee retention by making work seem more like a game. Moreover, it expands an operation’s capabilities in significant ways: from omnichannel efficiency to scalability to operational agility, etc. All of this goes a long way towards improving a company’s valuation.
Something else to keep in mind: many technology solutions that enable warehouse automation are now available as “Software as a Service” (SaaS). These cloud-based solutions remain a significant investment, but the SaaS subscription model significantly reduces initial expenditures, making them much more accessible.
We don’t have the teams to navigate us through implementation or fix the system if it breaks down.
The road that leads to warehouse automation is tough and perilous. It requires system configuration, user training, implementation experience, adapting to new processes, etc. In short, it’s just too complicated to navigate without a solid IT department. It gets even worse down the road: should the system break down, it will take time and resources to get it back up. Smaller companies just can’t afford the disruptions, let alone a full time IT team.
True: changes to a company’s infrastructure are complex and invariably transform an operation’s landscape, forcing everyone to adapt. It’s essential that companies rely on a comprehensive roadmap to navigate the transformations with ease and agility. That doesn’t mean, however, that a large—and expensive—IT team is required.
Solution providers usually have the expertise to help companies develop a roadmap, implement the solutions, train employees, and guide them through Go Live. Many supply chain consulting firms exist that also provide such services.
Once the solution has been deployed, some providers will offer to support and maintain the solution. In the case of SaaS solutions, the technical support and maintenance services are typically included in the subscription fees. Stringent Service Level Agreements (SLAs) ensure companies that disruptions will be rare and rapidly dealt with—even without the help of an in-house IT team.
Automated MHE requires space, space that I don’t have to spare.
Industrial space is not cheap. That’s why operators are constantly trying to maximize their warehouse’s capacity and reduce storage costs.
Adding automated MHE to an operation means dedicating some of that precious space to robots, space that human employees don’t require. In some instances, the DC’s entire layout must be redesigned so that automated MHE can move and function adequately, which obviously adds to its TCO. In a context where industrial real estate comes at a premium, space eating robots make little financial sense.
The all-too-common mistake, here, is to think that “warehouse automation” means “robots in the warehouse” or something like Amazon or Ocado’s fully automated fulfillment centers. The truth is that warehouse automation can be achieved without robots.
A WMS, for instance, is a software solution that automatizes processes in the warehouse and optimizes workflows across the whole supply chain. Users access the system’s interfaces via mobile devices or computer stations. As for MHE, it doesn’t have to involve robots moving up and down the warehouse aisles. An Automated Storage and Retrieval System (ASRS), for example, does not require more aisle space to function and will in fact help DC operators increase their capacity by unlocking access to elevated storage locations.
OK, a Warehouse Management System might not take space, but my operation isn’t complex enough to benefit from Artificial Intelligence (AI).
This is another common misconception about warehouse automation: automated systems are not the same as Artificial Intelligence.
AI performs high-end functions and has predictive capabilities. It can leverage data (from a WMS, for example) to help stakeholders make informed decisions (about inventory management, for instance).
Automation is more of a logic game, so to speak: “If X, then Y”. MHE or Supply Chain Execution (SCE) systems are configured to enforce the rules that logically structure tasks in the warehouse. In so doing, automated systems eliminate errors due to human agency and generate more efficiency in the movement of goods across the supply chain.
While every operation stands to benefit from automation, the same isn’t true of AI. A certain level of technological maturity is required for a company to draw all the advantages of AI.
Warehouse automation is very much transforming the future of supply chains. While some industries remain a bit slow to implement them, the warehouse automation market is still looking to reach USD 41 billion by 2027—almost double what it is now.
At this point, it should be clear that there is a wealth of different automation solutions on the market. Distributors, manufacturers, and retailers of all sizes stand to benefit from them. The trick is to dispel the misperceptions one might have about automation and to find the solutions and systems that are adapted to your operation’s requirements.
About Generix Group
At Generix Group North America, we provide a series of solutions within our Supply Chain Hub product suite to create efficiencies across your entire supply chain. Our solutions are in use around the world and our experience is second-to-none.
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